Variable rate mortgage popularity declines
Uncertain economic conditions have caused the fixed rate mortgage to become the home loan of choice, according to recent studies by a leading mortgage provider.
A survey conducted by Abbey National discovered that more than 70% of mortgage shoppers are reluctant to take out a variable rate home loan plan for fear of yet further rises in the national rate of interest, in the foreseeable future.
The national base rate has risen no less than 5 times so far in 2007, settling at its current position of 5.75%. However, analysts and indeed members of the general public appear to be bracing themselves for yet another rise in the next month or so.
In light of this proposition, rate conscious consumers appear to be doing all that is possible in order to avoid the variable rate mortgage, and it is also suggested that the number of newly issued fixed rate products, increased by around 25% during the month of August.
A spokesperson for the lender commented that fixed rate plans do traditionally come to the forefront, when economic conditions are not as certain as they could be. Consumers view the variable rate as a somewhat risky proposition at this particular moment in time, with many new applicants opting for plans, which offer more reliability with regards to budgeting for their monthly outgoings.
